Manila facing possible peak brownouts

Meralco Power Generation Expansion targets 1,500 MW amid brownouts risk, peak-demand stress and Luzon grid constraints, adding coal, LNG and diesel peaking plants, transmission support and energy-saving measures to stabilize supply.

Peak power demand on the Philippines main island of Luzon, where the capital city of Manila is located, is forecast to hit 7,900 megawatts MW in 2011, which is 300 MW higher than the 2010 peak.

Brownouts, as power alerts in Luzon indicate, could be prevalent from March to May if there are any breakdowns in power generation at peak-demand periods. Although 2,700 MW of additional power from new thermal plants is scheduled to become operational in 2013, new projects will be behind the demand curve, as they have not been coordinated or planned ahead of time.

Manila's economy is expected to grow at a rate of 7 to 8 this year, up from the 6 target in 2010. Energy-saving measures will be instituted again, with air-conditioning units being shut down early, and escalators and elevators in government buildings operating for reduced periods, as lower power rates elude manufacturers across industries. Another 150 to 200 MW could be transmitted to Luzon from the Visayas region, which is in the central Philippines.

Manila Electric Company Meralco is one of a number of companies looking to move into the power generation sector or expand their existing project base within the sector, following the sale of Philippine power plants under the Arroyo administration, with many of projects due to begin operations in 2013 at the earliest.

Meralco is planning to invest $2 billion to $2.3 billion to add 1,500 MW in capacity at its Luzon franchise area for power supply and distribution. President and CEO Manuel V. Pangilinan said in 2010 that Meralco was in the process of creating a new subsidiary, Meralco Power Generation Company, to operate the power generation stake. The total 1,500 MW will be constructed through 2012 to 2016, with the first project, a 150-MW peaking plant, to be constructed at Laguna with a diesel-fed "aero-derivative" turbine generator set. Funding for the $152 million project will come from 70 loans and 30 equity. Merlaco also had discussions with a number of companies with a view to partnerships, on the basis of offering the best benefits to the company and customers.

Meralco CEO Oscar Reyes said that the company also would construct coal and LNG facilities. He said that the company was considering expanding its distribution service beyond the present franchise, possibly going into specialty engineering and railway construction through affiliated company divisions.

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